Much like FPA's Robert Rodriquez (highlighted yesterday), another of the world's brightest financial minds, Templeton's Mark Mobius says we wasted a crisis, and nothing really has been fixed - the same thoughts this humble writer offered in 2008 and 2009 as bailout after bailout was granted, with no fundamental change to the system. While Mobius says it is around the corner I have great faith than the world's central banks will be able to print enough money to keep the balls juggling for quite a while more. Much like Rodriquez I have no idea when the proverbial manure hits the fan, but the seeds of said crisis are sown nicely. We can however be assured that a Fed who under Greenspan and Bernanke knows how to do nothing but create bubbles while kicking cans... and then crater the system, while being the bank's drug dealer in chief, will have another mess (of their own making) to clean up in due time. And just like this last time around when the house comes burning down, The Bernank (or maybe easy money Yellen by that moment) will race to the scene of their crime, pour water on the burning system and tell everyone to thank them for rescuing us! And no one will ask why we keep having the same problems, and who is the nexus of them all.
Until then we dance!
- Mark Mobius, executive chairman of Templeton Asset Management’s emerging markets group, said another financial crisis is inevitable because the causes of the previous one haven’t been resolved. “There is definitely going to be another financial crisis around the corner because we haven’t solved any of the things that caused the previous crisis,” Mobius said at the Foreign Correspondents’ Club of Japan in Tokyo today in response to a question about price swings. “Are the derivatives regulated? No. Are you still getting growth in derivatives? Yes.”
- The total value of derivatives in the world exceeds total global gross domestic product by a factor of 10, said Mobius, who oversees more than $50 billion. With that volume of bets in different directions, volatility and equity market crises will occur, he said. The global financial crisis three years ago was caused in part by the proliferation of derivative products tied to U.S. home loans that ceased performing, triggering hundreds of billions of dollars in writedowns.
- “With every crisis comes great opportunity,” said Mobius. When markets are crashing, “that’s when we’re going to be able to invest and do a good job,” he said.
- The freezing of global credit markets caused governments from Washington to Beijing to London to pump more than $3 trillion into the financial system to shore up the global economy.
- The largest U.S. banks have grown larger since the financial crisis, and the number of “too-big-to-fail” banks will increase by 40 percent over the next 15 years, according to data compiled by Bloomberg. “Are the banks bigger than they were before? They’re bigger,” Mobius said. “Too big to fail.”